News Corp Able to Dismiss Shareholder Lawsuit Over Hacking Fallout

The plaintiffs failed to show misleading statements during the relevant time period.

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Rupert Murdoch

A federal judge in New York has given News Corp and its leader Rupert Murdoch a reprieve from claims of concealing information related to illegal news-gathering practices, such as phone hacking at its U.K. tabloids.

The defect in the allegations, as spelled out by U.S. District Judge Paul Gardephe in an opinion on Monday, was that none of the allegedly misleading statements from News Corp executives came during the relevant class period.

The plaintiffs attempted to argue that the statements were actionable because they "remained alive" in 2011 and that the company had a duty to correct them.

But applying a standard adopted by the 2nd Circuit, the judge says that the duty to correct those statements still happened prior to the class period and that to hold otherwise would be to adopt an "endless breach argument, which would permit the plaintiffs to circumvent the well-settled rule that defendants are liable 'only for those statements made during the class period.'"

The judge dismisses the claims, but has given the plaintiffs an opportunity to amend their complaint. Separately, the judge refused to hold former News of The World editor Rebekah Brooks in the lawsuit because of a lack of personal jurisdictional.